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Rising material costs push Asia Pacific office fit-out expenses up 4.5% y-o-y: JLL


The biggest jump in fit-out costs were recorded in Australia, Singapore, and Malaysia. But fit-out cost increases will moderate towards the end of 2023, says JLL. (Picture of the Singapore skyline, by Samuel Isaac Chua/The Edge Singapore)

SINGAPORE (EDGEPROP) - Throughout the Asia Pacific region, the average cost to fit out workspaces has risen by 4.5% y-o-y, according to JLL’s APAC Fit-Out Cost Guide 2022/2023. The report states that the average fit-out cost is about US$12,470 ($17,223) psf, up from $11,932 psf last year.

Read also: Asia Pacific property investment volumes fall 29% in 3Q2022: JLL

The biggest jump in fit-out costs were recorded in Australia, Singapore, and Malaysia. For example, the Sydney office market has overtaken Tokyo as the most expensive market in the region for office fit-outs. Tokyo had held that top position for the past five consecutive years.

The report states that the rise in fit-out costs is due to increases in fuel and material costs. Supply chain disruptions and strict Covid restrictions in mainland China also contributed to production rates, project timelines, and material costs.

These factors will continue to drive up construction price inflation over the next 12 months, says Martin Hinge, executive managing director, project development services, at JLL Asia Pacific.

“Current levels of price inflation are unsustainable, but as the supply chain stabilises and the increased risk of occupiers deferring projects leads to a consequent softening of demand, we expect that fit-out cost increases will moderate towards the end of 2023,” says Hinge.

He adds that despite these challenges, companies are committed to reimaging their workspaces to fit the changing role of offices and reprioritise employees well being. For example, spending on fit-out components such as partitions appeared to fall y-o-y in 2022, as offices continue to evolve towards open-plan spaces to drive employee collaboration, says Hinge.

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